[unrev-II] open source and funding

From: Eugene Eric Kim (eekim@eekim.com)
Date: Tue May 02 2000 - 19:35:11 PDT

  • Next message: Eugene Eric Kim: "[unrev-II] advocate of BSD license"

    A couple of thoughts on licensing.

    Does everyone agree with Lee's e-mail on product vs. industry? If that's
    the case, then the major point we need to overcome before we reach
    consensus on open source is Eric's concern over sustainability.

    I'll rephrase his concerns as follows (Eric, correct me if I'm
    misinterpreting your e-mails):

    1. Can we obtain the proper funding to sustain an open source product?
        a. Is it possible to make money off of an open source product?
        b. Is it possible for an open source company to obtain VC funding?

    The answer to all three points is yes.

    Regarding point (a): There are several examples that prove this: Cygnus,
    CodeSourcery, the various Linux distribution companies, the various Apache
    companies, Scriptics, etc.

    Regarding point (b): Point (b) is really a two part extension of point
    (a). Is it possible to make a lot of money off of an open source
    product? That remains to be seen -- it's not clear that any purely open
    source company will ever have the type of returns on investment that VCs
    like to see. However, it's probably more likely that companies with
    either a hybrid proprietary/open source model like Scriptics or companies
    using open source essentially as a loss-leader like IBM can be very
    successful. Are VCs going to be interested in open source companies? The
    thing to remember about VCs is that there is a herd mentality. One VC
    invests in a semi-successful B2B company, suddenly, all the VCs want to
    invest in B2B. We've seen this herd mentality among open source companies
    over the last year. Previous to that, VCs didn't care about open source,
    and it's possible that in the near future, VCs won't care about it
    either. But as it currently stands, VCs have put their money where their
    mouths are and have invested in open source companies.

    So the final and overarching question is, is it possible to obtain funding
    for an open source project? Keep in mind that the Bootstrap Institute is
    not a business. One way to make money is from software licensing,
    although I do not think this is the right approach in this case.

    Several open source projects have proven that it's possible to obtain
    funding -- Apache, Linux, Mozilla, gcc to name a few. But the common
    thread behind all of these projects is that there is company support
    behind all of them. This support is not always in the form of
    money. Donald Becker, for example, needed high quality, high performance
    network drivers for his research at NASA, and so he wrote them for
    Linux. Money didn't change hands, but in essence, Becker was just doing
    what he is paid to do, and the Linux community benefited.

    This project can get funding without relying on software licensing, but it
    ain't gonna be easy. One other common thread behind many open source
    projects is that they began as completely volunteer efforts, without any
    real money behind them. It was only after they came out with a decent
    product that they garnered interest and money from different companies. I
    think we can avoid this, but it will require a lot of savviness and


    +=== Eugene Eric Kim ===== eekim@eekim.com ===== http://www.eekim.com/ ===+
    |       "Writer's block is a fancy term made up by whiners so they        |
    +=====  can have an excuse to drink alcohol."  --Steve Martin  ===========+

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    This archive was generated by hypermail 2b29 : Tue May 02 2000 - 19:53:51 PDT